FT the New Brazil

8/2/2019 FT the New Brazil

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TheNew

Brazil

Lula: the futureThe Brazilian president onthe reinvention of a nation

Difcult pathMartin Wolf: the economyis stable but lacks dynamism

Energy boomHow oil and gas reservesare underpinning growth

june 29 2010


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the new brazil | contents

photos:cor

bis;getty

F i n a n c i a l t i m e s | 3

contributors

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MArtiN WoLF Ft nm mmna

introduction

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t un dmnd al da aninfrastructure

A fn ml a nw aauto industry

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Towards greatness

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hu gnalEditor


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THE NEW brazil | iNTroducTioN

photo:Corb

is

Megacity: SoPaulo stretchesinto the distance


5/48

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the rise o brazil was

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F i n a n c i a l t i m e s | 5

Coming of ageBrazil sees itsel as destined or greatness because o

its new-ound political and economic stability. But it stillhas challenges to overcome, writesJohn Paul Rathbone

Brazil is a slightlygangly adolescent,standing tall

amid the worldcommunity


6/48

THE NEW brazil | iNTroducTioN

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Brazil has begun toplay a role in regionaland world aairsthat reects its size,natural resourcewealth and fnancialand economic het

Two leaders: Luiz Incio Lulada Silva and Hugo Chvez;Havaianas fip-fops (right)


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photos:get

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Brazil ranked 129th

out o 183 countriesin the World Bankslatest Doing Businessreport, worsethan Nigeria

On the webGo online or additional

eatures on Brazils economicrecovery:

n Ed Crooks reports onhow the proposed Belo Montedam project encapsulatesthe problems acing thecountrys large newhydro-power developments

nHarvey Morris on howBrazils creaking inra-

structure will cope with thedemands not only o hostingthe 2014 World Cup andthe 2016 Olympics, but alsoo supporting the countryseconomic boom

n Slideshow: Nicola Coppinglooks at one o Brazils mosthigh-profle exports: theashion industry

WWW.fT.com/NEWbrazil


8/48

the New brazil | commeNt

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A nations destinyPresidentLuiz Incio Lula da Silva describes his achievements in

reviving a stagnant economy and raising his countrymen from poverty

PhoTo:CorBIs

Over the past sevenyears, we have takentens of millionsof people out of

absolute povertyand created morethan 14m jobs


9/48

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utpia, but a ccrt pibiity. n

Reform of our politicaland electoral systemscannot wait thatwould compromise theadvances we haveenjoyed in recent years

the New brazil | commeNt


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11/48

the new brazil | COMMent

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Must try harderBrazil may have achieved stability, but its economy lacks

the dynamism of the other Brics. ByMartin Wolf

Brazils share of worldoutput declined to2.9 per cent in 2009,as Chinas and Indiasrose. This is the rise of

the ICs, not the Brics

1,950.1

China2015

152.5

Brazil2015

472.9

India2015

GDP per head 2015 compared with 1980

Constant prices (1980=100)

F i n a n c i a l t i m e s | 1 1


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13/48

photo:Gett

y

Charismatic leader: LuizIncio Lula da Silva,

president o Brazil, visitsa building project o the

governments acceleratedgrowth programme in

Rio de Janeiro

Who will lead?As Brazils president prepares to step down,there are two frontrunners for succession in

the opinion polls. ByJonathan Wheatley

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14/48

the new brazil | politics

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It worries methat people thinkthis electiondoesnt matter

Vying or the presidency:Dilma Roussef (let)and Jos Serra

ph

otos:getty


15/48


16/48

City of dreams:So Paulo has

become a hotspot for globalinvestment

bankers


17/48

the new brazil | economy

PHOTO:GeTT

y


Good fortuneWith little debt and plentiul growth, the economy

o Brazil is becoming the envy o many otherdeveloping nations. ByJohn Paul Rathbone

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ShkspsHamlet.Fo lon ot loss oth

tsl nd nd, nd oong dulls

th dg o husnd.Tods th nd o 2009, bzl

onl hl took Polonuss sntntous

dvc vn t s th tt hl hn t lond $14n to th int-ntonl Mont Fund to oost th

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nc, th l, ndsk th iMF o $42n lon, on o

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indd, on th smd tht th eU gd $1,000n scu

pckg to t topvnt Gk ot omcomng cs o

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th uozons dstntpolms.

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but t ll pss.Fo th momnt, bzl s lshng

ts n-ound dnmsm. and th

ths condnc hs com plplsns o optmsm out ts utu.

We were one othe last countriesto go into the global

crisis. And we havebeen one o the frstto come out


18/48

PHOTO:GeTT

y

3 | F i n a n c i a l t i m e s

the new brazil | economy

Thnks to th othodox nt-nfton polcs o om psdnt

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count n th 1980s s nghtmtht nood mms. expots hvquntupld n vlu ov th pst

20 s. Fogn dt hs lln to just4 p cnt o GDP.

Mo mpotntl, tn 2004

nd 2008, th lvl o povt llom lmost hl o bzls 192mpopulton to oughl qut. Ovth sm pod, nd hlpd n

ncom tns pogmm clldbolsa famlia, oughl 10m bzlnsjond th nks o th mddl clss,

dnd s housholds th monthl

ncom o r$1,100 ($610) o mo.all ths s souc o pd o M Lul

d Slv, 64, om lth optoho gn hs poltcl c n SoPulo s td unon ld. in on

o th olds most unqul socts,hs s s potnt smol o soclmolt nd hop.

Ths goth nd hophs lso hd po-ound conomc

consquncs.bzls sv-l mllon

n con-sums hvctd n nt-

nl mkt thtmultntonl com-pns scmlng

to tp. bzl s posd toovtk Gmn s tholds outh-ggst vhcl

mkt. wv dould oumnuctung cplt, ssantono roto Cots, ch xcu-

tv o Ltn amcn optons t

MaN, th Gmn tuck mk.So Pulo hs lso

com hot spoto glol nvstmntnks. Th fotton Sntnd, Spns

ggst nk, o tsbzln susdsd $8n n 2009s

ggst ntl pulcong, nd vludth unt mo thn th

nt oth o Dutsch bnk old-d. Th bM&Fbovsp, th bzlnxchng, cuntl tds mo sngl

qut optons thn n oth dv-tvs mkt n th old. and thnth mgs nd cqustons.

Th s hug ogn ntst,ss Jms Sncl, hd o CFS

Ptns, n nvstmnt nk ou-tqu. emlmtc o ths ntsts th ttmpt n M Spns

Tlnc to u out ts ptn, Po-tugl Tlcom, om Vvo, th jontlond opton tht s bzls ggst

mol phon opto. Tlncod 150 p cnt pmum to PTo ts sh. but gvn tht Vvo s on

o oth PT nd Tlncs ghtspots, th o s not nough.

MUCH OF THe COUNTryScnt conomc nd nn-cl succss stms om ts

on polc ots, ut lg pt slso du to sh good luck. Scd

pst css, bzln nks spntmost o th noughts t hom ththn vntung od. Th thovodd lodng up

th th su-pmlons tht lt lmost

snk th sts nnclsstm. Th as-dvn com-

modt oom thn kpt bzlgong though thost o th gloldontun, hl ts

socl polcs shlddth poo. N-zoUS ntst ts,

mnhl, gn todlug th countth chp mon.

Ths cptlnfos mxd

lssng. bzl, th ts lo svngs

t, ll ls nd ogn cptlto nnc ts goth. bNDeS, thstt-ond dvlopmnt nk, hs

lnc sht gg thn th woldbnks. yt vn tht s not nough to

mt bzls vst nvstmnt nds,

such s th $500n o plnnd n-stuctu nvstmnts nvsgd 2014. but th nush o ogn mon

lso thtns to dv th l to lvlstht thtn th compttvnss olocl xpots. Chp mpots could,

mnhl, undcut th vlt olocl mnuctus. it s polno ccdnt tht ncsng nums

o bzlns ms sttng upoptons od.

indd, th count m njo-

ng too much o good thng. ethhgh commodt pcs o lo USntst ts ould nough to

sustn oom nd otn hv nth pst. but bzl hs thm oth tth sm tm. as th iMF nd

n ts ltst gonl outlook, t s nunpcdntd onnz. Th chllngno s ho st to mng th ount

thout pggng out. as Ncols ez-gu, th iMFs gonl dcto,hs put t: avocdos good; so

cm, hsk nd tomtos. butmxng thm ll togth mks ouptt sck.

a sns o complcnc tht thgood tms o th pst 10 s llnvtl contnu o th nxt 10 m

tho bzls gtst tht.wth th conom gong stthn th 5 p cnt t t cn cu-

ntl sustn sl thout uthstuctul oms, nfton hs snov th cntl nks 4.5 p cnttgt. in apl, tht pomptd th st

n ss o ntst ts hks tht xpctd to tk th nchmkSlc t to lmost 12 p cnt. Tht

ould n unthnkl lvl n thUS o euop.

Unotuntl, t m lso sv to

ttct vn mo ogn cptl, sodvng th l to v mo uncom-

pttv lvls. Th cts o ths cnld sn n th dnng cuntccount dct. whl xpots hvn gong t 30 p cnt t,

mpots sng lmost tc s st.Cuts n govnmnt spndng ll

qud to cool don bzls d-

hot conom, lthough pplng suchstnt n n lcton ll not s. but thout t, th count could

n tm c th sm nncl vuln-lts tht hv don o ts conomso otn n th pst. as Cssus told

butus n ShkspsJulius Caesar,mn nd counts cn mstso th t. excsng tht mst

ould th tust sgn o bzlscomng o g. n

Cuts in governmentspending will berequired to cooldown Brazilsred-hot economy

1 8 | F i n a n c i a l t i m e s


19/48


20/48

photo:corb

is

Bumper harvestBrazils central plateau has been transormed into a global

agricultural powerhouse, writesJonathan Wheatley


21/48

the new brazil | agriculture

Andr pessa stands l hh wlu h hz y.

th v l m h w Lu eu Mglh h w h bh.Lk my h g, wy g v: h ,agm bzl, UK m u u 2008 k y Jrhhl Jm sl, h m .

i hk h g lm l-y wh w wll h bzl gulul, y p, ag-ul, muly.

iv hv

w bh , gly, h ghug pu, Mh t y uqu m um.

L h , lu u800m-1,000m v lvl, whhm h v h y h-g, h vg l ( m- ly -g u l h my mwh hv mg h m bzluh). rll qu , u-lly, l. t lg, u, m lm, u h mk muh l h bzl h g gulul M G , h w.

av ll, h l vgl ll lvly h. thm m h ly mh h l l v h 20 30 y l bzl,mly g ul g-ulu, h m h wl m l g.

Lk h m M G,h w bh h lwh u u w hlk u y. thy ylly y, mz

k l h.thy u h lhlgy, v vl h m hv- wh llgu ymu wh w h.

bu ulk m

h b-zl, hy hv mg v m h ll u ug huy gulul vl-m. My m l h-w h amz ug h mly h h m-1960 h m-1980,wh hy w hl y gvmv ll g w l vml u.

sm hm mly gvml gul h wly , g w huy wl , uhh, h amz , hg. oh w l uh lw y w lgl h 1990

Bean-feast:

workers harvestsoya on a farmin Bahia. Brazil

produced 67mtonnes of soyabeans last year

These armers usethe latest technologyin crop varieties andcombine harvesterswith sat-nav systemsaccurate to inches


22/482 2 | F i n a n c i a l t i m e s

h u h mu l hyul l mg hg.

Lu lw w l g,wh wk hu ml mml y hmu lvy.

B

etter enorceMent,

u u mvml gu hmk hv ugh my mv-m. a u w bh h uug hv l lvly ly, my mhv lh ug m gv h h h bzl hv ly lwly, ll. vh, g wh h k h hv hbzl gulu h k hy k.

Yu hv v wh llw yuy--y v, vw h k g vlv u h g h lw, y

p. th h g hg. ih y l hwy g u.

th m ly h m gu yg vml lu lw, u h hy l ll lvl h, m h u -

l hg u-l lwy u lyg u lv, mm lwh. bu hmmm h m l, hyy l hw h mml hggg uu mmy xhg .

m h l g: v hu hu h-, h h h 40-50 hmy m h vu g- u wk. ey gmuh m qukly; wk -ly , l, hu , hy l lg hv k h u, whh

f hm l mlym h m.

n ll m u Lu euMglh u lg h l.suh m my v hmjy y, u wll . aly,hy hv ugh wgh hv ulu g gv

h h m wll lmml g. My m, xml, hv u -hg h wk. ay muwllg llw k lg h mly.

W vy, vy v ubzl, y M rhhg, hxuv aGco, h m mh-y muu. i vy wu h h ly uu l vy l m.

th x mg MG h lbzl h ly gllgulul whu. m mlg gulul uy juw g, bzl h m

Greener on the otherside: modern farms

adhere to strict labourand environmentalregulations


23/48

the new brazil | agriculture

photos:pan

os


In spite o the eciency gains

Brazils armers have achieved over

the past two decades, they still ace

one signicant constraint on competi-

tiveness: transport.

According to Agroconsult, a arm

consultancy, it will cost an average o

$103 to transport a tonne o soya rom

Mato Grosso in central Brazil to ports

in the countrys south-east during the

current harvest. That compares with a

eld-to-port cost o just $22 in the US

and $17 in Argentina both important

competitors o Brazils on world markets.

Even in Paran, southern Brazil, wherethe distance to port is much shorter, the

average cost per tonne

will be $44.

The reason is simple:

the extreme paucity o

rail and river transport,

ideally suited to carry-

ing relatively low-value

goods over long dis-

tances when time is not

o the essence. In Brazil,

in spite o the countrys

continental dimensions,

roughly 70 per cent o

cargoes are carried by

road. Most highways are poorly paved,

i at all, which means high maintenance

costs or lorries, many o them old and

long past their best. Rising uel prices and

punitive taxes add to the burden.

It would not take much to turn this

situation on its head. Brazil is blessed with

one o the worlds greatest river systems.

Apart rom a chain o mountains along

the coast, much o its countryside is at,

making it easy to build railways. Yet a

chronic shortage o investment has let

these advantages largely untapped.

This is starting to change: a railway

rom Belm at the mouth o the Amazon to

the interior o So Paulo state 1,700 miles

to the south has been under painully slow

construction since 1987, although progress

has speeded up recently. Other railways

privatised in the late 1990s have taken

some o the burden of highways in the

south. Two more railroads that will connect

central Brazil to ports in the states o Riode Janeiro and Bahia are being readied or

construction.

Some investors are

already taking a punt

that these will indeed

be built and quickly.

The prices youre

seeing or land good or

soya beans in the north

o Brazil are taking into

account the act they

expect to have inra-

structure improvements

that will allow these

properties to be more

protable urther down the road, says

James Sinclair o CFS Partners, a So

Paulo boutique investment bank involved

in arm deals.

[But] i these inrastructure

improvements are not put in place,

some o the prices theyre talking about

are too high.n

end of the road?

Highways impede productivity, writesJonathan Wheatley

h wl gg x ,hk, g ju, g f,ug, hl, h ymlx , ml l, wll uh-gg x mz k.

i h hv h y g wl mg y mkg -

mu y g. ov h w , uvy mu g u h h ul, g rrgu, m m gul-u w ul - GV ag, h GV-eaespu hl s pul.

Wh h lkg ggv , wh , h l lv h k gwh k b-zl gu h x lvl.

th g wll vk hfronter regons, nd other newres wll develo long the sme

lnes, sys pess. its much moresustnble model. and ts excellentfor the country. n

In spite o efciencygains armershave made over thepast two decades,one big constrainton competitiveness

remains: transport


24/48

photo:corb

is

THE nEw brazil | pHoTo E ssay

Human capitalThe inauguration of Braslia in 1960 as the nationsnew seat of government crowned an era of optimism,

growth and reform. That spirit has returned,saysJonathan Wheatley


25/48

Built from scratch:Braslia, as seenfrom the top ofCongress, includingboth parliamentarychambers and the

ministry of justice all designed byrenowned architectOscar Niemeyer

It is 50 years sincebzl md mo mph

m o h h uu:h uguo o bl,h pl ul om

h h v mp o

bzl l plu.th plll w h bzl

o 1960 d h bzl o 2010

kg. th, ow, bzl w ld dvlopml. th pdo Julo Kuhk, om 1956 o

1961, w kow h 50 v. i w pod o pulludd vm h w od

h uldg o bl d ld hgoud o pd oom gowh h 1960 o mo h 6 p

. Luz io Lul d slv, wholk o ompd o Kuhk, h ml h h ol o h

d h mpo o vm,lhough h ow poj hv l gdo d omwh low

movg. nvhl, h lv o h d o h wh gowh lodg ov 6 p . Kuhk,lk Glo Vg (1930-45 d


26/48

photos:eye

Vine;Getty;maGnum


1951-54), h ud pl ho o o bzl g

pd. Lul d slv would lov ojo hm; h ld, odg oopo poll, mo popul p-

d o d. aov ll, 2010 1960, bzl lv wh hxm o h w d h pomo h uu.

F l, hough, blpoo h o fo l h gogph l.

i povok pd d dmo o uul d pul h-u; ouo d lo,

pll mog -m vo, o o hum l; d om-hg ppohg hm d lohg

o d, wd-lookg polllqu. bzl o od kow hpog d dvlopm md

ml p, o hough gdo popul gu. n

THE nEw brazil | pHoTo E ssay

Above all, in 2010 asin 1960, Brazil is alivewith the excitementof the new and thepromise of the future

Inauguration day, 1960 (far right):a worker shows his family the newcity. In the background is theNational Congress by Niemeyer.The interior is shown above, while

the architect is seen in front of thesame building (below, middle);President Kubitschek opens a hous-ing block (bottom right); a workerduring Braslias construction, whichtook less than four years (right)


27/48


28/48

th e new B raz il | profiles

credit


The power setJonathan Wheatley and Vincent Bevins profle fve

men who can each claim his part in Brazils rise romrunning its capital markets to Rios Olympic selection

eike Batista

E

ike Batista is BraZiLsh m, h ou

m $27b, hghh h h ol, ogo Forbesmgz. H h b uo m o om l g;h h, elz, hlp u -o m comph Vl o rodo l pv m

Vl o h ol bgg pou- o o o h o-lgmg omp h ol.

r polglo euop,B ough l p- hl ug gg hUv o ah b llg u- oo o oo. B Bzl, hh h hl 1991 b oppgh o b-o-b o mol vl qu Lum Olv, h

hom h o o hv o hl.H hum o xm p-

bo hm Bzl, am ol hmpohp.

Bu B o h plbo hl m ugg. H o log pbo bu l u 10- o o ho h po

ol hmpohp, hl o h

m h o ro Jo.Bough up h mg

log, B h m h ho bu h l 1980, m o mo gol m h amzo, l b vlopg h o m Bzl ov. Fom 2000, ho h o o Bzl eBX (h l, plu Xo mulpl o vlu) ub- MMX (mg), MPX (g),OGX (ol g), LLX (log) OsX (hpbulg oh upplo h ol g u).

H hv omhg lo o o-o mog Bzl o-plm h h oughl $10b

PHOtOs:PaULOFridMan;MatriX;BLOOMBerG


29/48

nizan Guanaes

NiZan GUanaes Viewshml mbo oh ou. th hm o

Gupo aBc, Bzl lg vg mg v goup, blv

h xpo o aBc bo hlp-g o pomo Bzl , uh, oom h ou oom ol.

Bzl mgg m,Gu . w o b mgg ulu. w hv o movom bg ommo ou o

bulg ol b om Bzl.Bo h o

slvo, h oug Gu lop om o h omv h Uk. a ug o Bzl, h

bul puo ll v-g op. i o mmobllvo vm h o o,l Hl, o pp Folh so Pulo, m p ou om xm lo-up o h Gmo hl vo ou hhvm. wh h mou

bom l, oh vo : i pobl o ll hp o l hl olpg h uh.

i 1989, Gu oo ov hdM9 g h bu p

Joo auguo Gug Vl. i2000, dM9 qu b

ddB wol o $111m, Gu l vg p o o-ompogm o luh

pol G. to l, hu o ov dM9ddB

h Vl, ou hvg g a.

th omp h h l bm Gupo aBc,

holg omp h omp18 omp h opo ggom bg o pomogBzl bh ho v pug o mul.

no h ol 20h-lgommuo goup, h ulvu o $277m, Gupo aBc

om h l publ og o llv omp b 2004 2008, h ll mo o o voh mbou pl. Bu h omp- vm o hul

bgg o lv up o h pom.MMX hh ol om o m o

aglo am o $5.5b 2008 l poug o o. MPX OGX ll b lvg g ol

b m-2011. LLX po, su,ll b opol b h o 2011 au suppo b h ollog

. OsX hp lo u oomm opo b 2012.

B jo h h lvgh o pv Pac o Bzl o h govm g-hp l goh pogmm,

g o lv h uuBzl o bl . i o

b m. JW

andr esteves

THe yOUtHFUL Faceo a ev (gh) h

b po om o hm v h Bzl -go-g pl m l. H h h co, Bzl bggug loholgoup, ou $4.9b mg

h rol duhshll o o 13mg quooh om

$12.5b hevvm

b, BtGPul, h

b volv ov h p moh. dug h m

po h lo p l publ og h

ol o $24.5b o 11 l,lug sp s, ho

iPO o Bzl ub hol bgg l .

Foml m h moBzl vm b, e-

v h mg h publ oh ou mo vm

bg ulu, h xp bm o hllg bllo p-u e B (l) o h pooo Bzl lh vul.

Bu lhough ev m ohvg mo mo h h p,h gg h v h mmovo. i v o h

Eike Batista isBrazils richestman, with a ortuneestimated at $27bn,according toForbes magazine

o h i oul ll up go o hbh, h ol h Ft hol boh s iPO. i hv l

o o b p o omhg bgg,o b v o hg.

H p o v ugg h l h. ev jo BtGPul 21--ol m l 1989. H o qul , 1999,h oug p o-ol om ou, lg Pulhough o o h po oxpo Bzl pl m.

wh hpp o Pul b2006 2009, h o

b s b UBs, h u omo lg. UBs lm bough o $2.6b 2006 ol bo ev p l

o o b h globl o$2.5b. Popl Bzl gv gu: h Pul ol o$2.9b h qu o $300m (pl h b h ou o p) bough b o $2.2b h quo $2.1b. a o po pu :somm ou hv ou . eh , l ev hg o o o Bzl mopoul vm b. a oo hg . JW


30/48

th e new B raz il | profiles

PHOtOs:cOr

Bis


ol l lu Pugo,wl-M Po & Gmbl.

dvg h m b n yo so Pulo, Gu m om-m o xpg opo uh,pull o bu h g-l ou. i h p o , Gupo

aBc h qu o clog, dojo P & Odll(h l vo clo b glg), hl oh o h omp(h l o hh) h g o h Lua.

a g pp h cl-o Globl iv ho boo

h o mg b gv uh dvo, Gugu h Bzl houl zh oppou o h

m. Bzl o o, b o, h

. VB

edemir pinto

E

deMir PintO Has seenmbl hg

h oo ov h oBM&FBovp, Bzl mul-xhg. H bm h xuv 2008, hol BM&FBovp

b h mg o hou uu xhg hso Pulo o xhg.

i o , Po (gh)h ov p goh Bzl xhgg, hmg oh ou -glough- v-m o

o muh o h Bzl ombu, uu ommoxhg h bom h ol h-lg xhg b m vlu.

a oom b g, Pojo h BM&F uu xhg 1986, bomg pobl o mgm lm hollog . B 1999, h hxuv. wh BM&F mg hBovp, h ll v o-hxuv h l of oh omp.

a Bzl hugg o h o h globl l plumm vlopou, pl pou o Bzl o h po h h govmmpo 2 p x o og

poolo vm o lo pp-o o h l.

Po o h Bzl qu u l h v-o mgh mpl p o bu ho Bzl omp l boh h hom. i h , hx pov lgl mbol o oll b BM&FBovp goh.i p o op-o h bggo h , h ibovp, Bzl mqu x, h lmo pl ol-l vlu Mh 2009.

Po Bzl xp h h l h ou h oul gulo, hh povbl o vo. w vo h gulo o ou xhg, o h hv hg ompov, h . wv o h.

U Po, BM&FBovph h vl goh mlol. i Mh, h umb oopo x ho o Us xhg. i M, hxhg v vm-gg om Moo, h g g.

Po pl m Bzl oul o bl p oog mo, h oom ol m ogo. Bu h l

lm: B h o x

ll bh o-bggxhggoup h

ol. VBn

Carlos nuzman

Few Men can cLaiM tOhv b B Obm.Bu p l-mu

vo om h Us p, clo ahu nuzm ho

voou h Olmp bg

p l Oob. co oh bh o h vro Jo bu o lbo h h oul b ho-g h summ Olmp 2016.

i log m omg, om: o souh am ou hv ho h gm. Bu p- o h Bzl Olmp om-m (cOB), nuzm m h h Bzl oul o h hllg.

a o, hm o h og-g omm, h mu pov .

Olmp ml o hm: h 1964 too gm h ompo Bzl h o po, vollbll.L, hvg luh l bum, nuzm

oo ov h o h Bzlvollbll oo, h -ol u o Bzl vollbllm o bu o h l-hp b 1975 1996.

a cOB p, nuzm bo g h Olmp ro 2004

h, bu h bough hP am Gm h 2007,hog h l ppo o h 2016 b. H loluh g pogmm ohl oh, bl og h ull bg o h govmo h Olmp b.

nuzm ll hv o boupomhp o hum hro Olmp. F mo hllgg h obl o qu -

uu h h o vol.th o hog lvl o ll- h vl h uou ro b , h ug h

b po, hough pl upoj o h Olmp vllg, lgo h m o b.

th uu hllg mpov o b mo ful o ovom.Bzl h log o pp o hOlmp h o h wol cup 2014, bu umou l lgh h Bzl oobll o-o, u h lhp o h o-ovl ro tx, bho m o ouo mbl.th ou oull bh uu bulg gll.

i ll ll o nuzm o hoh Bzl hl h pobl- h h, m oh, hv loggu v. VB


31/48


32/483 2 | F i n a n c i a l t i m e s

Fuel for a nationDiscoveries o oil and gas have boosted Brazils economic

clout, but the country has also made advances inother orms o power generation. ByEd Crooks

Once seen asurd by it lk ooil ul, Brzil i ow

ommoly dpitd rgy oruopi.

Th diovry o th vt pr-ltoil ld i th dp wtr o thoutry outhr ot, log withlrg volum o pottilly vlubl

g, h rid th propt tht Brzilould mt ll o it ow rgy dd bom igit xportr o oil

d prhp v g.Howvr, whil th opportuiti

r hug, o r om o th problm.

Th outry ormou hl-lg to dlivr th rlibl rgyuppli dd to ul it dvlopmt

d mt pirtio or improvdlivig tdrd.

Brzil pprtly mgr dow-

mt o ol, g doil w grt timu-lu to iovtio, dth outry piord

rwbl rgy logbor my dvl-opd oomi.

a atoio DiLit, th mi drgy miitr durig

th 1970 who i th uthor o di-

tiv tudy o Brzil rgy ytm, putit, th outry dvlopmt o hydro-

ltri powr or ltriity d ugr- thol or trport ul mit oupi outtdig poitio i

th world rgrdig th proportio orwbl rgy i it rgy mtrix.

Hydro-powr provid roughly our-

th o Brzil ltriity, d rw-bl ovrll mt rly 45 pr t oth outry rgy d.

Howvr, tho d r growigt. Brzil rgy oumptio i tillwll blow dvlopd-outry lvl, t

bout 1.2 to o oil quivlt (TOe)pr pit pr yr: l th hl thlvl o th poorr mmbr o th eU

uh Portugl d Pold, whih u

bout 2.4-2.5 TOe pr hd, lt loth Us, whih u 7.8 TOe pr hd.

I ltriity, th diprity i imilr.Brzil yrly powr oumptio iroughly 2.2 mgwtt hour pr pit

pr yr, omprd with 3.7MWh iPold, 4.9MWh i Portugl, d13.7MWh i th Us.

Brzil h b u tory itrm o to ltriity: bout97 pr t o th popultio i ow

otd, but th ytm rquirotiuou ivtmt to mt riigdmd. Th rul o thumb i thtltriity oumptio grow by

roughly 1 prtg poit mor thth oomy, o with growth timtdt pproximtly 7 pr t or 2010,

powr dmd ould grow by bout8 pr t.

Th outry rli o hydro-

powr my b goodor it rbo-dioxidmiio d dpd-

o importd oilul, but it uproblm o it ow.

I 2001, th ltriityytm urd vrhortg, ud

by ombitio odrought d prviou udrivtmt.

Thi i tur ud igit dmgto th oomy, uttig growth to bout1 pr t i tht yr.

Muriio Bhr, th hi xutiv

o GDF suz ergy Lti amri,th Frh-owd group tht iBrzil lrgt privt tor ltriity

grtor, y riig powr dmdm th idutry h ormoupottil to grow.

W r too r wy rom th td-rd o powr oumptio i dvlopdoutri, h y. I you ombi tht

hug pottil dmd with our hugpottil rour, thr i grtopportuity thr.

H dd tht th trutur o thltriity idutry udr Luiz I-

Hydro-powerprovides roughlyour-fths oBrazils electricity


33/48

PHOTO:PanO

s

Force of nature: theItaipu Dam hydro-

electric power stationon the Paran Riverlocated on the border

between Brazil andParaguay


34/48

PHOTO:cOrBIs

the new brazil | energy

io Lul d silv, who w ltd pridt i 2002, i highly vourbl

to privt tor ivtmt. Govr-mt gi o-ordit projtioo powr dmd rom th lrgly

privtly owd ltriity ditributor,d grtor ig log-trm upplyotrt tht llow thm to

thir ivtmt.Th rgultory id tody i

vry prditbl, d o you

hv oio, you how rvu trm or30 yr, Bhr y.

Howvr, th dvlopmt

o w hydro-powr projt ihmprd by growig orbout th t o dm buildig

o lol ommuiti d th vi-

romt, rtd i th itr-tiol mpig git th

Blo Mot projt pld orth amzo rgio.

nw projt r digd vry

dirtly rom th git dmo th pt, d u wr, mordvd turbi i ttmpt

to miimi thir impt o lolommuiti. GDF Jiru dm,d th sto atoio dm big

built by Odbrht, th Brziliotrutio group, both o thMdir rivr i th r wt o

th outry, rquir

muh l oodig prmgwtt o ltriitygrtd th dm

rom th 1960, buttht h ot b u-it to tiy thir

oppot.Whil i mot

dvlopd outri

ll th pottil or hydro-powr hgrlly b xploitd, Brzil tillh hug utppd rour. ev

llowig or th mor rtritdtyl o dvlopmt ow ud to

try to mt viromtl

or, th outry i uigoly bout 30 pr t o ithydro-powr pottil.

ev o, th limittio ohydro-powr m thr i

till itrt i dvlopig mor

ol- d g-rd plt whihow provid roughly 13 pr t

o Brzil ltriity d mor

ulr plt i dditio toth two lrdy i oprtio,whih grt urthr

2 pr t.Howvr, uppli o oil

ul rmi limitd. For oil,

Brzil i ow l-ufit,d th ohor pr-lt ld

or th propttht th outry will

bom igitxportr. But th oil ihrd to , ot

23,000 t blow lvl udr lyr owtr, lt d rok.

BP miv oil pilli th Gul o Mxio i

rmidr o th hzrd o xtrtig

oil i uh dp wtr.For g, th problm r v

mor dutig. Pipig th g to hor

m out o th qutio owig toth log dit ivolvd, d thmot promiig rout ppr to b

liquyig it ohor, o otig plt.Tht, howvr, i w d utrid

thology, d will hold difulti oit ow. although Brzil i lo tryig

to dvlop othr our o domtig, d h built two trmil orimportig liqud turl g, it look

likly to hv to rly o th 2,000-milpipli rom Bolivi it mi ouro import, v th hr o liqu-

d turl g grow.so whil Brzil ow h portolio

o rgy rour tht y outry

would wt, it till h log wy togo bor it rlly b id to hv imilrly vibl lvl o proviio.n

The country isusing only about

30 per cent oits hydro-powerpotential

Fossil fuel: Luiz Incio Lula da Silva(centre), president of Brazil, and Jos

Sergio Gabrielli (front left), presidentof the state oil company Petrobras, visit

an oil rig near the city of Vitria


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36/48

photo:pano

s

Waste land:devastation in

the Amazonrainforest,burned to create

charcoal andclear for cattle

The long roadto conservation

Despite the appalling plunder o its rainorest in pastyears, Brazil is determined to halt the destruction and

sow the seeds o new hope. ByFiona Harvey


37/48

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m bcu dm b b.

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dw u c Kc w m


38/48

the new Brazil | environment

photo:getty

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mm, cm c m w, . W d w wd c. rdd w

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Brazil frmly believesin ormal negotiation,but climate change istoo important to wait we need to showthe world action


39/48


40/48

Roads to

prosperityAt long last, investment is orthcoming or Brazils

inrastructure, with highways, railways and superportsset to revolutionise trade.Jonathan Wheatley reports


41/48

the new brazil | infrastructure

photo:GEtt

Y

It is about an hour and20 me y elce mr e Je a, cl

vllge e e ee r e. tee

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e ce c e l g.t me l me.

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i seel, C-gge eelmke, ryl dcsell WeM, e bzl- g cmy.

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ve e cmlex.n evy y eg

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ty, s le 90me cg ye me qe ll bzl eg e.by 2014, wll le 230m e,

w 70 e ce ll vg y. t wll em e w cl gwy ew s el, ley cgee

w qee evy le cwlgg cle ee.


A massive concretefnger, 2.9km long,points out into thesea: Au Superport

High demand: ahighway in the city

of Marlia in the

state of So Paulo


42/48

photo:stiLLpiCturEs

a e ly bzllg e me wl-clefcecy: ee e l eel

mll l eey e pecm e -e; l cmlex evelg e se, l e-e. a see e r,e mg g Vle lg

l cmlex cee eel mll.

But iF suCh proJECtsw e lem bzlle ele, e

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, e e ee eceevmel e. a e meme, bzl vee m evy

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lg me eml l veg e eewle cec w we el.

te eleccy ec wely ee ccel exmle j lc ve eee, e well-ege egl. i we ew-ge, y c, egly cey yme ge. alg 80 ece el ve cce cle we, j 42 e ce e lke ewge yem ly 32.5 e ce ewge ee.

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ewk y c lge c-y; ew lwy ve ee me ece me e eg l,

ge ee lly lw.i e cmg, e g

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ee cce wle e mcey gveme ecme eve me

le. t, l, cgg. Fll bzl, ly e ccgwe e r e Je, vey g ew. n

Water problem:only 32.5 per

cent of sewage

is treated


43/48


44/484 4 | F i n a n c i a l t i m e s

photo

:corbis

Bright sparks:workers weld car

frames at theGM assemblyline in So

Caetano do Sul

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udyg - w g w guwy wd.

t $100m y, d sm, ju v gdu dvm Us -mk u; Mg,Gmy, su K d au.

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agd GM, vg

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d dug dwu.l y, Us mk

k z 1982,v bz gw y 11 3.1m, d y uyu-d GDp gw, xdgd d gwg mdd . idu-y y v bz w vkGmy wd u-g

v mk c, Us dJ y y.

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Gmy, w md 740,000.a bz mk w

d, mk gum . F, w d k v mkg u eu u m-, d y $1 x bz y, w m d m dd iy.

Fd, uggg u -y Us dd,d 25 uv quy l am mkgm my bz. GM d k u g bzu, u wd

w g my. lk m-, GM d gg

Speeding aheadAs profts decline in the US and Europe, Brazilscar-making industry is setting new records as its plantsrun overtime to meet demand.John Reedreports


45/48


46/48

the New Brazil | auto iNdustry

creDit


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um) bz d. l , wkd gd y o Gmy wk bz:

v a d k-ud eu c m .

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v, w jd wdwd df v 1.6m y 2014.

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dmd y m, - u- , my w - g.

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kg ym w m ddv x 3-4 y.

cum vu g g, y Fd tuj, y

w csM su am. t w

gd bz du wmk mv w wd.

t g mk d y y bz 35 mduy dm mg ud m gwg m-

. t k y xd y mk d bz.

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su K hyud d ccy aum v bz .

bz um mgmu dud, y hu t-tg, du dvm d Fd d b. t dy muu g-gdu

bz umd.n

Last year, as the UScar market shrankto a size last seen in

1982, sales in Brazilgrew by 11 per cent

Loaded: a lorrycarrying new

GM cars inSo Bernardodo Campo

photo:Gett

y


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FT the New Brazil